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My wife Kendra and I have been married since August 2006. In the process of combining our respective incomes, bank accounts and shopping priorities, it quickly became clear that if we didn’t develop a system for managing our money, we would very quickly not have any. So after some brainstorming, some inspiration, and a whole lot of trial and error, we finally put together a budget system that has saved us (literally) thousands of dollars. Since it’s worked so well for us, and a few of our friends have asked for the details, I decided to write this up so we could share it with other people needing new tips for managing money.

Whether you’re single or married, this budget thing is ridiculously useful. It has helped us pay back our debts, stay out of debt, put aside serious savings, and it helps us manage our money without accidentally overspending. And even though we called it the “newlyweds” budget, it will work just as well if you’re single, or have been married for years.

Brief Overview:

1. Figure out how much you make each month, in total.
2. Define your Obligations, Needs and Wants.
3. Assign limits that match your income and lifestyle.
4. Keep your receipts, and add them up each week.
5. Review once a month.

1. Figure out how much you make each month, in total.

Keep your pay stubs for a month, and add up how much your and your spouse/partner pull in by the end of the month, after tax and deductions. If either of your paycheques vary because of shiftwork or overtime, an average will be fine.

2. Define your Obligations, Needs and Wants.

The reason budgeting exists is to help you spend money on purpose. Part of that is knowing what you need and want to spend your money on in the first place. The best way to start is by separating your payments into three categories: Obligations, Needs and Wants. Don’t worry about filling in the numbers yet, just figure out what payments you make in the course of a month.

Obligations include bills you can’t stop paying. These include:

Rent or mortgage payments

Utilities bills, condo fees

Car payments

Debts, student loans repayments, etc.

Savings, RRSP contributions, mutual funds, etc.

Charitable giving

One of the most important things to consider for this category is Savings. Most people only put aside savings if they’ve got some cash leftover at the end of the month, but putting it aside as an obligation – that is, skimming it right off the top of your paycheque before you even get the chance to spend it – is extremely helpful. In fact, we’d say it’s necessary.

Needs include stuff you pretty much need in order to get by. These include:

Groceries

Gas

Household goods like soap, toilet paper, etc.

Dates

Yes, as cheesy as it is, my wife and I include “dates” under this category, since we figure spending time together each week is more than just a “want,” it’s a priority. (This is the intermission, where you can vomit if you wish.)

Wants are the things you can do without, but help make life a little funner. Talk with your spouse about what kind of items you want to include in this area of your budget. For us, it includes entertainment, clothing and spending cash. Of course, as newlyweds who probably aren’t making a ton of money, this is the area where a little bit of sacrifice is important. For instance, you might need to cut back on how often you eat at restaurants or go for drinks with friends.

3. Assign limits that match your income and lifestyle.

Once you’ve clarified your Obligations, Needs and Wants, you get to decide how much money you’ll be spending on each category. It’s important to customize it with two things in mind: how much money is available, and what kind of things are important to you. You might need a few drafts to get it right, and it will definitely require a little guesswork the first time you create this. Don’t worry, we always end up modifying this a little each month, as gas prices change, holidays come around, and so forth. Just grab a piece of paper, write down each item in your O-N-W list, and starting putting down numbers.

The important thing is that by the end of it all, it all ends up being equal to (or more ideally, less than) the amount you earn each month.

Here is a fictional example of what a completed Obligations, Needs and Wants list might look like:

As you can see, there’s a “leftover buffer” of $556. This is extremely useful, and you and your spouse should decide what to do with it. You can readjust your numbers so it’s all worked into your budget. Or, you can do what we do: use it as an emergency fund for when unexpected and bad things happen – say, your dishwasher breaks, or your blinds need replacing. Every couple months or so, once the buffer has accumulated in the bottom of our bank account, we scoop up a thousand dollars or so, and invest it in savings again.

4. Keep your receipts, and add them up each week.

A budget is useless if you spend outside of it. You need to have a way to make sure your spending is on track – besides seeing the credit card bill at the end of the month, that is.

You’ll need a chart to help you track your spending. If you hate details and administrative work, this might be kind of annoying, but it’s still important. We’ve created one that you are welcome to download and fill in your own numbers with, or you can create your own. Here’s what to do with it:

Customize the chart for your budget. *

Print it off and put it somewhere in your house that’s private but accessible.

Keep your receipts.

At the end of each week, spend 15 minutes with your spouse, and add up all the receipts from that week for each category. Make a note of how much you overspent or underspent.

Throw out your receipts after each budget session (no reason to keep them, unless you’re returning something or submitting it for tax purposes.)

Doing that every week, and adjusting your spending accordingly, ensures that you will always have money in the bank.

Make sure the number of days on the left hand side reflects the current month. Grab your Obligations, Needs & Wants list. What categories will you be tracking? Type in their names at the top of each section. You only need to track categories where purchase amounts fluctuate with each transaction (groceries, gas, etc,). No need to track rent, as it’s a flat amount each month.

Grab a calculator, and figure out how much you can spend each week. You can do this by dividing the month total in each category by the number of days in the month. Multiply by seven – that’s your number for each week. For the last week, the one containing an irregular number of days – you do the month.

5. Review once a month.

At the end of the month, evaluate how the month went. How much did you over or under-spend? In what categories do the limits need to be raised or lowered? Were you able to live and eat comfortably? Are there any specific goals you’re saving for? (A new car, a bedroom suite, a new TV, etc.)

Following these tips have helped us SO much. Each month, we’ve come in around $20 – $40 over or under our budget, meaning that our spending is almost exactly on target. We don’t have any credit card debt, we’re steadily paying back a lingering student loan, and we’re investing and saving plenty of money each month. It’s awesome. It takes a bit of discipline, but it’s definitely worth it.

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Kevan Gilbert

Kevan Gilbert is a writer, speaker and content strategy on the West Coast of BC, Canada.

[If you are interested in finding more about MC Hammer, who is pretty much the most amazing person ever, please read this Wikipedia article. And thank you, Harrison, for teaching me about this amazing facts.]

I avoid using the debit card for most things. Instead I use an envelope system where I put a certain amount each payday into one of 3 different labeled envelopes: food & groceries, entertainment, spending cash. I find it helps me see tangibly how much money I’m spending and how much is left from the budget.

Rick

I was just searching around on the internet for “newlywed budget” and found your blog. Great information on it. It’s giving me some really good ideas on creating my own excel spreadsheet to help out. I’m getting married in October and we are starting to get things in line now (February). I hope that’s enough time to help us out in the long run.

Something neat that we’re using (since she’s currently in another state) is google docs. We can both edit the excel documents that we’ve created for the budget, and we can edit them at the same time, while we’re on the phone!

Deepak

Dear Kevan…I need advice in that the following frequently happens:
1. My income changes every day (depends how many fish I catch)
2. My wants become obligations and my needs become wants
3. My lifestyle has no definition
4. Receipts get lost and I forget how much I saved.

Appreciate it.

Desperate Spender.

Kaitlyn

Thank you so much. I needed that. My boyfriend and I are planning on getting married in the near future and we were just discussing writing up a good budget outline, and this really helped out. Thanks!